§ 11.10 a.m.
§ The Question was as follows:
§ To ask Her Majesty's Government whether, in the light of the substantial sale of public assets recently undertaken, they have any proposals for adjusting the system of public accounting so as to make clear the extent to which the proceeds from such sales will be used for capital purposes.
§ Lord Brabazon of TaraMy Lords, the Government have no plans to change their accounting systems with regard to the sale of public assets.
§ Lord EzraMy Lords, I thank the noble Lord for that not unexpected reply. However, I should like to ask him, first, whether he considers that the recent sale of British Telecom, yielding something of the order of £4 billion, does not represent a thoroughly exceptional transaction? Secondly, in those circumstances, should it not, as in the accounts of any normal enterprise, be shown as an extraordinary item? Thirdly, as the income arises from the sale of assets, should it not be reserved for the creation of new capital assets, of which the country stands sorely in need?
§ Lord Brabazon of TaraMy Lords, we certainly regard the sale of British Telecom as an outstanding success on the part of the privatisation programme. However, in accordance with the Consolidated Fund Act 1816 receipts are not hypothecated for specific purposes. This allows the receipts to be used in accordance with the Government's overall economic policy and gives Parliament greater control over the Government's expenditure plans. Sales of physical and financial assets have always been treated as negative public expenditure. In nearly all cases acquisitions of 725 assets increase public expenditure. It is therefore symmetrical and logical that these aggregates should be reduced when assets are disposed of. This treatment is in line with the international guidelines for national and government accounting.
§ Lord Boyd-CarpenterMy Lords, is it not also reasonable to take into account the very heavy burden of public investment which the Government anyhow undertake, particularly in respect of the nationalised industries, including the coal industry?
§ Lord Brabazon of TaraMy Lords, I certainly agree with my noble friend. Capital expenditure by the Government has risen every year; in constant terms it is slightly up. Moreover, taking private and public capital expenditure together, in 1984 we expect to achieve a post-war record and we expect to do better than that in 1985.
Lord Paget of NorthamptonMy Lords, can the noble Lord tell us whether there is any record of private enterprise selling on the Stock Exchange a company at what was immediately recognised to be less than half its value?
§ Lord Brabazon of TaraMy Lords, I presume that the noble Lord is referring to the sale of British Telecom?
§ Lord Brabazon of TaraMy Lords, as I have said, we were delighted by the privatisation of British Telecom. In fact we were taken by surprise to some extent, by its success. It is obvious, with the benefit of hindsight, that it might have been possible to sell it for a little bit more. However, we have now achieved a record number of individual shareholders. More than 2 million people applied for these shares, which was considerably more than the number for which we had hoped. We regard it as very good that share-ownership should be increased by such a massive extent in this country.
Lord Bruce of DoningtonMy Lords, is the noble Lord aware that we are not surprised that the Government are surprised at the so-called success of this operation? Any government ought to have known perfectly well, if they are capable of reading even the figures that were put out in the prospectus, that the capital worth of British Telecom based upon the forecast projections was vastly in excess of the price at which the shares were sold. Moreover, your Lordships were told so in this House.
Is the noble Lord further aware that, although, on the Government's latest information, there may be some 2 million individual shareholders, in about six months' time the noble Lord may have a very different story to tell when the stags have had their way—which indeed they have so far. Is the noble Lord further aware that the treatment of this item in the Government's own accounts does violence to every canon of accountancy and to the proper administration applicable to an ordinary public company in this kingdom?
§ Lord Brabazon of TaraMy Lords, it is not for me to speculate on how many of the 2 million people who applied for British Telecom shares will or will not sell them over the next six months. Nor will it be a matter for us. It will be a matter for British Telecom. As regards the sale of assets, we are behaving no differently from how the previous Government (of which the noble Lord was a member) behaved in 1977–78 in their first privatisation exercise.
§ Lord Mackie of BenshieMy Lords, would the noble Lord the Minister please answer the question posed by the noble Lord, Lord Paget of Northampton? Does the noble Lord know of a single private issue which immediately doubled after the sale?
§ Lord Brabazon of TaraMy Lords, not without notice. However, I think that there have been several issues on the Stock Exchange which have doubled very quickly, but they have not been privatisation issues.
§ Lord Harmar-NichollsMy Lords, is my noble friend aware of any advisers who have greater experience and more prestige for giving advice to the Government in the fixing of a price at which these shares should be put on offer than the advisers who were chosen and whose advice was accepted?
§ Lord Brabazon of TaraMy Lords, we were extremely confident in the advice that we were given. We chose the advisers who we thought were the best people to advise us.
§ Lord Dean of BeswickMy Lords, bearing in mind the ill-feeling and distrust that was generated and displayed in another place yesterday over the Government's action to halve the amount of money being allowed back to local authorities from their own capital receipts, will the Minister give an undertaking now that the £5 billion which has been raised by the sale of public assets by local authorities will remain untouched and will not be used by the Chancellor of the Exchequer to lower taxes in the future?
§ The Lord President of the Council (Viscount Whitelaw)My Lords, I think that the noble Lord knows as well as I do that that is a totally different question. During the debate yesterday I was asked to try to cut down Question Time. If I allow questions totally outside the main Question, I should not be fulfilling what the House asked me to do yesterday.
§ Lord Dean of BeswickMy Lords, I am sorry but I am afraid that I have to challenge the ruling of the noble Viscount. The Question is about the sale of public assets.
§ Lord Dean of BeswickMy Lords, it is not out of order. Will the Minister answer my question?
§ Viscount WhitelawMy Lords, I can only say that yesterday I was enjoined by Members of the noble Lord's own party to cut down on the amount of time that is taken at Question Time. I have sought to do so at the first opportunity, as I think the noble Lord and 727 many others would expect me to do. I am sorry if the noble Lord feels aggrieved, but I think that he is asking another question, and so in his heart does he, and I hope that he will put it down on another occasion when no doubt he will receive an Answer.